Sterling stumbled over the last couple of weeks, as the end of Theresa May’s tenure as Prime Minister approached. GBP/EUR fluctuated around €1.13, with the pairing briefly hitting lows of €1.12.
It’s been a similar story for the GBP/USD exchange rate, with the pound dipping a cent from $1.27 to $1.26. EUR/GBP, meanwhile, has been hovering around £0.88.
Brexit headlines continued dominating pound sentiment for the second half of May, as speculation about who would take on the mantle of PM intensified. At the start of June, 13 Conservative MPs had put themselves forward, to take over from Theresa May.
Contenders included Sam Gyimah, Mark Harper, James Cleverly, Kit Malthouse, Michael Gove, Dominic Raab, Matt Hancock, Jeremy Hunt, Boris Johnson, Esther McVey, Andrea Leadsom, Rory Stewart and Sajid Javid. As Brexit is unlikely to progress until the Conservatives have a new leader, the pound will remain on the back foot, over the next few weeks.
However, the euro has, so far, been unable to capitalise on the pound’s weakness, partly thanks to the European Central Bank’s (ECB) financial stability review, providing cause for concern. The bank warned that the Eurozone’s financial stability remains threatened by a global downturn.
While the looming shadow of Brexit will continue driving demand for the pound, in the mid-term, there are also some influential data releases on the horizon, including inflation figures for the Eurozone. If the rate of inflation in the Eurozone eased in May, the euro could come under pressure.
Eurozone retails sales and the European Central Bank (ECB) interest rate decision will also be in focus. Dovish comments from the ECB would be euro-negative.
Meanwhile, the UK is set to publish its latest PMI figures. If activity in the all-important services sector picked up in May, the pound could edge higher. Over in the US, the focus will be on the ongoing trade dispute between the US and China, and US employment figures.
At Currencies Direct, we’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news, or how it could impact your currency transfers. Since 1996, we’ve helped more than
250,000 customers with their currency transfers. Just pop into your local Currencies Direct branch, or give us a call to find out more.
T: +34 922 971 781